The University of Limerick finds itself in a sticky predicament, looking to avoid interest and penalties on a €1 million tax bill after mistakenly thinking their acquisition of 20 student residences was exempt from stamp duty. There are concerns raised around the advice provided post-purchase by their auditors, PricewaterhouseCoopers (PwC), which did not rectify its erroneous counsel, even after the university sought clarity on the stamp duty issue, leaving several months to elapse before the obstinate liability was discerned.
The housing deal in August 2022 only created further complications due to these stamp duty misunderstandings. University President Prof. Kerstin Mey has been on medical leave since acknowledging in March that the university had suffered overpayment to the tune of €5.2 million for the residences.
In light of their claim for exemption, on the grounds of charitable status, being shot down, the university was forced to pay a stamp duty bill of a little over €1 million three months back.
The University of Limerick effectively ignored new 2021 tax rules set by the government imposing stamp duty on bulk property purchases of ten or more residences; a measure set in place to hinder investment funds from buying up several properties.
The university’s campus accommodation provider, the Plassey Trust Company (PTC), made a plea for Revenue mitigation, according to information provided to the Dáil Public Accounts Committee. PwC submitted a request to Revenue on behalf of PTC on February 23, 2024, regarding the reduction of interest and penalties. The university is in anticipation of a response. Both Revenue and University of Limerick have refrained from comment.
The stamp duty issue provoked the University of Limerick to commission a housing deal review from Ms. O’Donoghue, the previous Head of the Department of Social Protection. Her March-released report revealed the issue of stamp duty was raised initially in a memo from the University of Limerick’s solicitor to their corporate and financial and performance officers in February 2022. Despite their belief that no stamp duty was due on the acquisition because of the university’s charitable status, according to Ms. O’Donoghue, no such confirmation was provided prior to the deal’s approval.
Regrettably, Limerick planners have deemed student housing in UL as ‘unauthorised’ due to their excessive costs. It was suggested by the buildings and estates’ director, the same day, that UL should obtain ‘explicit guidance’ concerning stamp duty. There is no proof that this instruction was taken into consideration then.
The matter of stamp duty was not brought up again until August 2023, when PwC received a ‘brief enquiry’ seeking confirmation regarding the charitable status exemption.
Regrettably, the reply provided was not wholly detailed as it failed to mention the 2021 removal of the exemption for purchases that include 10 or more residential units. The director explained this oversight since the original query didn’t state clearly that the plan was to purchase up to 20 houses. But, even after clearing up the confusion, the previously given advice was not corrected. This resulted in the stamp duty liability remaining hidden until several months afterwards.
All this happened while the UL president was on a sick leave at the same time as when the authority was discussing a report regarding a housing overpayment sum of €5.2m.